HySum Flexibles Global (SZSE:300501) Is Paying Out A Larger Dividend Than Last Year

The board of HySum Flexibles Global, Inc. (SZSE:300501) has announced that it will be paying its dividend of CN¥0.15 on the 28th of May, an increased payment from last year's comparable dividend. This takes the annual payment to 1.3% of the current stock price, which unfortunately is below what the industry is paying.

See our latest analysis for HySum Flexibles Global

HySum Flexibles Global's Payment Has Solid Earnings Coverage

Even a low dividend yield can be attractive if it is sustained for years on end. HySum Flexibles Global is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

Unless the company can turn things around, EPS could fall by 1.1% over the next year. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 32%, which is definitely feasible to continue.

HySum Flexibles Global's Dividend Has Lacked Consistency

It's comforting to see that HySum Flexibles Global has been paying a dividend for a number of years now, however it has been cut at least once in that time. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. Since 2016, the annual payment back then was CN¥0.176, compared to the most recent full-year payment of CN¥0.15. This works out to be a decline of approximately 2.0% per year over that time. A company that decreases its dividend over time generally isn't what we are looking for.

Dividend Growth May Be Hard To Achieve

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. However, HySum Flexibles Global's EPS was effectively flat over the past five years, which could stop the company from paying more every year.

HySum Flexibles Global's Dividend Doesn't Look Sustainable

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. While HySum Flexibles Global is earning enough to cover the payments, the cash flows are lacking. We don't think HySum Flexibles Global is a great stock to add to your portfolio if income is your focus.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for HySum Flexibles Global that you should be aware of before investing. Is HySum Flexibles Global not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.